One of the largest and most popular car rental companies in China, CAR Inc., has recently seen its shares jump by nearly 28 percent. This huge jump in share price came after it made its trading debut in Hong Kong this past Friday. Investors are looking to get in on the ground floor of a company that is expecting to see its earnings nearly double to HK$11 billion by the end of 2018.
Reports from the Hong Kong stock exchange show that shares for CAR Inc. jumped to HK$10.88 Friday morning. Investors who missed out on the first buying of shares are now forced to deal with the higher prices. One Hong Kong broker, Jasper Chan, said that the demand is high now because so many people jumped on the shares right when it went public. People know how much the company is worth, and buying shares at such a low price was a smart move.
CAR Inc. is known as a self-drive, short-term rental company. This is good since the market for short-term rental cars in China has been on the rise. This industry expects to continue to grow at an average rate of 27 percent per year from 2013 to 2018. As a result, the industry is going to see a surge in money of around HK$10.6 billion by 2018. This is nearly double the amount of money that the industry received in 2013.
So why the huge rise in short-term car rentals? This has to do with the strict regulations and restrictions that China is placing on owning a car. China is trying to limit pollution and decrease traffic by limiting the number of cars that people can own. Also, there has been an increase in disposable income in China, which means that more people are looking to go on a holiday.
Many car rental companies are looking to break into the Chinese market due to increased demand. In fact, the growth rate of car rentals in China has doubled the 13 percent increase that is expected in Brazil. It also far outpaces the growth in the United States, which is expected to only be about 6 percent. It isn’t just short-term rentals that will see an increase. Long-term rentals in China are also expected to grow by around 11 percent a year during the same time period.
While other car rental companies look to break into the Chinese market, CAR Inc. is already there. As a result, it’s on the ground level of a revelation that is taking place in China. This is an industry that is just going to continue to expand over the coming years, and investors need to get in on the ground level to make some real money.